Manufacturing Bankruptcy

The authors analyze the politics behind Detroit's manufactured bankruptcy through an analysis of capitalism's expropriation of assets in order to produce wealth -- a process that is at the expense of the working-class majority.

Abstract: -

Excerpt:

It used to be that 40% of all U.S. workers received pensions. Although corporations have cut that figure in half over the last 30 years, more than 80% of all public sector workers still have defined-benefit pensions. Studies have shown that these workers make less than private-sector workers, but in this era of neoliberalism, it's the public sector workers who are on the hot seat.

The attack on pensions, which began in the corporate sector, is spreading now to a full assault on public workers. Teachers and other municipal workers are demonized as lazy and overpaid. Since proportionately more African Americans and women are public sector workers, the racism and sexism that infects our culture is an additional factor in viewing these workers as "undeserving."

State pension funds currently top $2.6 trillion. In 15 of those states, public employees do not receive Social Security so they are entirely dependent on pensions and their own savings in their retirement. These include California, Illinois, Massachusetts, Ohio and Texas. In Detroit, uniformed (fire and police) workers aren't in the Social Security program.

When the economy heated up in the 1990s, states were advised that they didn't need to contribute to the pension funds; high interest rates alone were enough. Since accounting standards for public sector pensions are lax, officials were able and delighted to act on that advice! Then, when the bubble burst, many states skipped their contributions as a way to balance their budgets.

As a result, two-thirds of state pensions are now considered underfunded, meaning that they do not have enough money to cover all the long-run claims of their work force. Supposedly Illinois is about 67% funded while New Jersey is at 33% and Massachusetts stands at 27%.